Rashesh Manhar Bhansali v. ACIT (Mum.)(Trib.)

Case snapshot

Sections / provisions: S. 2(11) of Black Money (Undisclosed Foreign income and Assets ) and imposition of tax Act; 2015

Questions before the Court / Tribunal

• Black Money (Undisclosed Foreign income and Assets ) and imposition of tax Act, 2015 S. 2(11) : Undisclosed asset located outside India – Applicability of the Statute – Accounts not in existence at the Black Money Act, 2015 came into force – The new legislation operates for those accounts and assets too.[I.T. Act S. 139(1)] The assessee closed their undisclosed foreign bank accounts in 2008 and 2011.The Black Money Act came into force in 2015. It was the contention of the assessee that the asset which did not exist at the time the new law came into force cannot be brought within the ambit of the new law. The Tribunal held that the important date is the date on which the undisclosed comes to the notice of the Department. Further held that no deduction shall be allowed with respect to the undisclosed bank account while computing the additions under the Black Money Act, 2015. (BMA Nos. 03…
• Which factual, statutory and procedural conditions controlled the requested relief?
• How did the forum apply the governing provisions to the evidence and procedural history recorded in this case?

Material facts and procedural background

BMA Nos. 03 and 05/Mum/2021 Assessment year 2017-18 RasheshManhar Bhansali ……………….………Appellant Nishika Terrace, 55A, 5th floor, AG Khan Road Worli Sea Face, Mumbai 400006 [PAN: AABPB5614N]

Appearances by P J Pardiwalla, Sr Advocate, and Madhur Agarwal, Advocate, along with FenilBhatt,Prateek Jain and Mani Jain, for the appellant Anand Mohan, Commissioner (DR), for the respondent

1. This set of cross-appeals call into question the correctness of the order dated 5 th July 2021 passed by the learned Commissioner (Appeals) in the matter of assessment under section 10(3) of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act 2015 (hereinafter referred to as „the BMA‟) for the assessment year 2017-18.This is amongst the first few cases, which is perhaps only the beginning of this new stream of cases, reaching this Tribunal concerning the assessments under th isAct. This legislation, it may be recalled, was brought in by the present Government in 2015, as a part of a series of measures, to address the menace of undisclosedincome and assets stashed abroad.

UBS AG‘s Singapore branch, in the incorporation of GJC-BVI, and the said entity was incorporated as a company under the BVI Business Companies Act, 2004 . It was also found that during the period 2008 to 2011, certain bank accounts abroad were maintained and operated by RasheshManharBahansali ( RMB- in short , or ‗ the assessee before us ‘) and his wife Ami Rashesh Bhansali (ARB- in short , or ‗ the assessee‟s wife ‘) and large amounts of credit entries were recorded in these accounts. One of these accounts (i.e. account no. 161753) was in the name of GJC -BVI and it was opened on 4 th September 2008 and closed on 16 th May 2011.

This account showed credit entries of US $ 122,011,244 (equivalent to Rs 829,67,64,592 converting @ 1USD= INR 68). There was one more account (i.e. account no. 137274) was in the name of RMB, it was closed on 8 th October 2008, and it showed credit entries of US$ 25,011,282 (equivalent to Rs 170,07,67,176). It appears that there was perhaps one more bank account, i.e. account no. 611254 in the same bank and this account is stated to be margin account of GJC‘s account no. 161753, but that does not find mentio n anywhere in the assessment or the appellate order before us , and is thus not a subject matter of proceedings before us.

Appellant / petitioner / assessee submissions

The assessee was, inter alia, asked to furnish the list of all bank accounts held outside India and to furnish complete details of all such accounts right from the date of opening till date, a detailed note on the transactions carried out in thes e foreign bank accounts and their tax treatment. Instead of complying with this requisition, the assessee submitted that the BMA is not applicable in this case because it applies only from 1 st April 2016 onwards, i.e.the assessment year 2016-17. It was a lso pointed out that somewhat similar requisitions were made by the income tax authorities on 19th July 2013 and 24 th January 2014, which have been replied to, and a search operation was carried out on the assessee on 17th March 2016 for which post search assessment proceedings are being carried out separately anyway.

7. On 28th March 2019, as the assessment proceedings under the BMA were on the verge of completion, the assessee finally owned up the bank accounts and submitted as follows:

8. The assessee then also submitted an explanation for the entries in the bank accounts. An effort was made to explain each of the entr ies in the bank statements shown by the assessee. It was also submitted by the assessee that unexplained entries, not supported by the withdrawals, in account nos. 161753 and 137274 were only US $ 7,15,538.58 and US $ 1,29,688.92 respectively, which, vide statement dated 28 th March 2019, the assessee offered to tax.

15. When these appeals came up for hearing before us , Shri Pardiwalla, learned counsel for the assessee, submitted that broadly speaking, there are six questions that are required to be adjudicated by us, and identified these six questions for our consideration. It was submitted that once these six question s are answered, most of the issues in these appeals will

Revenue / respondent submissions

23. Shri Anand Mohan, learned Commissioner (Departmental Representative), submitted that the assessee before us was in denial mode all along and it was just at the fag end of the assessment proceedings, and just three days before the end of the time limit for completing the assessment, that the assessee owned up the bank account and furnished his explanations in this regard. This action on the part of the assessee, according to the learned Commissioner, was part of the strategy of the assessee to pre -empt a thorough examination of the details furnished. Learned Commissioner submitted that the assessee has been completely non - cooperative right from the beg inning, and has not furnished any information other than what was anyway in the possession of the Assessing Officer. It is submitted that the explanations of the assessee during the search proceedings, during the BMA proceedings as also the story cooked up for explaining the delay in owning up the bank accounts, lack any credibility. Learned Commissioner submits that the assessee has not come clean about these bank accounts and continued to be evasive even during the assessment and appellate proceedings.

Court / Tribunal analysis and reasoning

Therefore the Grand Total of undisclosed credits detected in both the account numbers i.e. 161753 and 137274 are as follows.

4. It is therefore, submitted that, by no stretch of imaginations the amount of Rs.999 crores sustainable. Apparently, in calculating this exorbitant and exaggerated figure of Rs.999 Crores, w ithout ascertaining the true nature of the credit/ deposit-whether income or liability, which is legally not permissible since every credit entry is not an income liable to tax.

Ans. Sir, I have appended the detailed explanation of each and every entry with my submission dated 28 -03-2019 wherein, I have quantified an amount of US$ 7,15,538.58 and US$ 1,29,688.92 as credits in bank account not supported by withdrawal in Bank Account No. 161753 and 137274 respec tively. This may therefore be treated as income and taxed accordingly.

Ans. The account number 161753 pertained to M/s Gold Jewel Corporation, BVI. As a legal requiremen t for all companies, there needs to be at least two directors and therefore, I think, Ami being a housewife was also made director for the namesake purpose and for compliance only. She had no active role in operations of that company. Similarly, her name w as added in the bank Account opening form for namesake purpose only. I think, her name was also included by my father in the Bank account to safeguard the interest in case of any eventuality. As you can see, her signatures are not there in the beneficial o wner form, which is a part of the KYC documents. There is no records of her operating the bank account no. 161753 and she never issued any instructions to the bank for receipt and/or payments or any other operations from this account. Therefore, under no g rounds can she be made as beneficial owner. Due to the above mentioned reasons, I would like to request you that the credits in both the bank accounts which are not supported by withdrawals may be added to my income and not in her income which would meet the end of justice.

9.1 The submission dated 28 -03-2019, Statement of the Assessee recorded u/s 8(b) of the of the Black Money (Undisclosed Foreign Income and Assets) And Imposition of Tax Act, 2015, on 28 -03-2019, and affidavit of the Assessee dated 29-03-2019 were considered carefully. In this regard, it is pertinent to mention that the Assessee in the Statement dated 28-03-2019, has stated that he was made a director of M/s. Gold that the Assessee was one of the director in the aforesaid offshore entity and the offshore Bank Account No. 161753 and 137274 were held by him and therefore, the Assessee is held to be beneficial owner and accountable for the transactions made in the Bank Accounts.

occasions. The fact is established through various documentary evidences provided by the Compete nt Authorities of Singapore through the FT &TR, which has been discussed in length in the foregoing Paragraphs herein above, that the Assessee was a director in the offshore entity M/s Gold Jewel Corporation, BVI, and was a joint account holder in the Bank Account No. 161753 held in the name of M/s Gold Jewel Corporation, BVI, andmaintained in the UBS, AG, Singapore. The Assessee was also holding Bank account No. 137274 in the same Bank. The Assessee has signed various documents with regards to incorporatio n of the offshore entity and opening of bank Account. Further, the Assessee has not denied that the documents were signed by him. Therefore, the very fact is established amount of US$ 87500 being quarterly interest at 7% on Callable Range Accrual Note is c redited periodically in the Bank Account No.161753. One of such credit was due between the periods from 12-06-2008 to 28 -08-2008. However, entries are missing in the bank account for this period. Which is also required to be added in the total undisclosed income out of the Bank Account No. 161753.

Operative decision and relief

37. We have also noted that Their Lordships have specifically declined a stay on the applicability of the provisions of the Act or a stay on proceedings by the authorities. We must humbly bow to the superior wisdom of Hon‘ble Courts above. When Their Lordships considered opinion is that no such stay is warranted on the facts and in the circumstances of the case and even till the writ petition is disposed of, it cannot be open to us either to stay the proceedings till the writ petition is disposed of, or, in any manner, delay the disposal of these appeals till the writ petition is disposed of. In any event, having carefully perused the material on record and having considered the entirety of the case, we do not think it to be a fit case for holding these proceedi ngs in abeyance till the disposal of the aforesaid writ petition. This prayer of the assessee is, thus, rejected.

an undisclosed foreign asset. Since, according to the learned senior counsel, it is a case of tax on the unaccounted foreign asset by way of bank account, the provisions of Section 40(1) and 40(2) will not come into play. While we agree with the learned senior counsel on legal principle, and to that extent, his plea is indeed well taken, we reject this plea on the short ground that, as held by us for the detailed reasons set out earlier in this order, what has been assessed in the i mpugned assessments is undisclosed foreign income. On account of this factual aspect, even though learned senior counsel is correct in his legal plea, the assessee gets no relief in respect of levy of interest under sections 40(1) and 40(2), referable to Section 234A, 234B and 234 C. To sum up, the grounds of appeal raised in these appeals are disposed of as shown below:

6) In the facts and circumstances of the case and in law, Learned CIT (A) erred in confirming the action of Assessing Officer in levying interest u/s 234A, B & C while calculating the total demand, as per the ground/s contained in the assessment order or otherwise. Dismissed. 7) Even otherwise, the Impugned Order is bad under the law and is required to be set aside. No adjudication required

111. In the result, while the appeal of the assessee is dismissed, the appeal of the Assessing Officer is allowed. Pronounced in the open court today on the 2nd day of November 2021

Ratio and legal principle

The narrow proposition associated with Rashesh Manhar Bhansali v. ACIT (Mum.)(Trib.) concerns black money (undisclosed foreign income and assets ) and imposition of tax act, 2015 s. 2(11) : undisclosed asset located outside india – applicability of the statute – accounts not in existence at the black money act, 2015 came into force – the new legislation operates for those accounts and assets too.[i.t. act s. 139(1)] the assessee closed their undisclosed foreign bank accounts in 2008 and 2011.the black money act came into force in 2015. it was the contention of the assessee that the asset which did not exist at the time the new law came into force cannot be brought within the ambit of the new law. the tribunal held that the important date is the date on which the undisclosed comes to the notice of the department. further held that no deduction shall be allowed with respect to the undisclosed bank account while computing the additions under the black money act, 2015. (bma nos. 03… The proposition cannot be separated from the judgment’s facts, the governing statutory version, the forum’s jurisdiction, and the exact relief recorded in BMA Nos 3 and 5/Mum/21.

For working-paper purposes, the decision should be cited only after matching the material facts and reading the passages under the judgment-grounded record above. The editorial outcome label “Dismissed” is a navigation aid; it does not replace the operative order or explain every issue in a multi-issue case.

Why this judgment matters

This decision is relevant when a file raises the same central question identified in the source headnote: Black Money (Undisclosed Foreign income and Assets ) and imposition of tax Act, 2015 S. 2(11) : Undisclosed asset located outside India – Applicability of the Statute – Accounts not in existence at the Black Money Act, 2015 came into force – The new legislation operates for those accounts and assets too.[I.T. Act S. 139(1)] The assessee closed their undisclosed foreign bank accounts in 2008 and 2011.The Black Money Act came into force in 2015. It was the contention of the assessee that the asset which did not exist at the time the new law came into force cannot be brought within the ambit of the new law. The Tribunal held that the important date is the date on which the undisclosed comes to the notice of the Department. Further held that no deduction shall be allowed with respect to the undisclosed bank account while computing the additions under the Black Money Act, 2015. (BMA Nos. 03… Its practical value lies in the way the ITAT Mumbai connected the governing provisions—S. 2(11) of Black Money (Undisclosed Foreign income and Assets ) and imposition of tax Act; 2015—to the procedural posture and evidence before it.

The authority level is ITAT / Tribunal. That affects persuasive or binding weight, but authority level alone is never enough. Territorial jurisdiction, statutory period, the identity of the challenged order, and later appellate treatment must all be checked before the case is used in advice, a submission, or litigation strategy.

Practitioner action points

• Begin with the complete judgment and mark the paragraphs supporting the exact proposition relied upon.
• Match the statutory version of S. 2(11) of Black Money (Undisclosed Foreign income and Assets ) and imposition of tax Act; 2015 and the decision date 2021-11-02; do not assume the current text is identical.
• Compare the notice, assessment, appeal or other procedural sequence with the chronology recorded in this case.
• Verify the stated later-history status and any review, appeal, SLP, curative or rectification proceedings before citation.
• Record why the client’s evidence is materially similar, and also record any fact capable of distinguishing the result.

Does this case match your facts?

Detailed reliance and distinction analysis

Identity check. Confirm that the cited cause title is Rashesh Manhar Bhansali v. ACIT (Mum.)(Trib.), the proceeding is BMA Nos 3 and 5/Mum/21, and the decision is dated 2021-11-02. These fields are taken from the judgment record and should appear exactly in the citation note.

Bench check. The judgment identifies the coram as Pramod Kumar (Vice President), and Ravish Sood (Judicial Member). A later order by another bench, a larger bench, or a higher forum may alter the weight or interpretation of the proposition.

Provision check. The source associates the dispute with S. 2(11) of Black Money (Undisclosed Foreign income and Assets ) and imposition of tax Act; 2015. The practitioner should place the historical statutory text next to the current text and identify every amendment, proviso, explanation, rule or notification that could change the analysis.

Fact check. The source issue is not a free-standing abstract rule. It arises from the concrete record summarized above. A reliable application note should list the common facts, the different facts, and whether each difference affects jurisdiction, admissibility, limitation, burden, computation or relief.

Remedy check. The recorded result is Dismissed. Where a matter is remanded, set aside, partly allowed, or disposed with directions, the exact operative language is more important than a binary winner/loser label.

History check. The current closure state is Rectification / High Court appeal / SLP status: check pending. If that state is pending, the page does not assert that no later case exists. It means the check remains open and must be completed at the point of professional reliance.

Section / provision impact

• S. 2(11) of Black Money (Undisclosed Foreign income and Assets ) and imposition of tax Act — apply the exact version considered in the judgment.
• 2015 — apply the exact version considered in the judgment.

Case network

• ITO 32(2)(3) VS MAYUR R KAMDAR — ITAT Mumbai · Dismissed
• Palmon Impex Pvt. Ltd. v. ITO — ITAT Mumbai · Dismissed
• JCIT v. Aries Agro Ltd. — ITAT Mumbai · Dismissed
• ACIT v. Ranu Vohra — ITAT Mumbai · Dismissed

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